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In its response, widely expected by market observers, Anglo said that BHP’s unsolicited offer “significantly undervalued” the 107-year-old mining company and would be “highly unattractive” to its shareholders.
The company also said the bid the contemplated a structure which the board believes is “highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent in the proposal, and significant execution risks.”that BHP’s initial offer was significantly lower than the kind of price that would compel the miner to consider the proposal. If BHP wants to initiate negotiations, it will need a sweeter offer.
“If we include our estimate of synergies on an after-tax present value basis, we estimate Anglo fair value to be 2824p per share, which equates to a $42.6 billion equity value. That is 28% above the most recent Anglo share price, and we believe it is a reasonable starting point,” LaFemina wrote. “With copper representing 30% of Anglo American’s total production, and with the benefit of well-sequenced and value-accretive growth options in copper and other structurally attractive products, the board believes that Anglo American’s shareholders stand to benefit from what we expect to be significant value appreciation as the full impact of those trends materializes,” Chambers added. in recent years after output fell and costs mounted.
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